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United States v. Rushing

December 20, 2002

UNITED STATES OF AMERICA, PLAINTIFF,
v.
GARY W. RUSHING, DEFENDANT.



The opinion of the court was delivered by: Cooper, District Judge

FOR PUBLICATION

MEMORANDUM OPINION

This is an action to recover money owed on Health Education Assistance Loans ("HEALs"). A private lender granted the HEALs from 1984 through 1986 to the pro se defendant, Gary W. Rushing, when he was enrolled in a chiropractic school. Rushing received bankruptcy protection in 1995. The plaintiff ("the government") moves for summary judgment on the complaint, arguing that (1) Rushing's HEAL debt was not discharged in bankruptcy because he did not request a Bankruptcy Court to find that its nondischarge would be unconscionable; and, (2) the sum sought, which is in excess of the sum borrowed originally, is the result of compounded interest. See Fed. R. Civ. P. 56. The Court will grant the motion for the following reasons.

BACKGROUND: HEAL PROGRAM; RUSHING'S HEALs, DEFAULT, AND BANKRUPTCY; and, PROCEDURAL HISTORY

I. HEAL Program

Private lenders may grant federally-guaranteed loans to "a student enrolled in a school of . . . chiropractic" under the HEAL program. 42 U.S.C. § 292b(a). A Bankruptcy Court may discharge a HEAL debt if certain requirements are met. In 1984, those requirements were: A debt which is a loan insured under the authority of this subpart may be released by a discharge in bankruptcy under title 11 only if such discharge is granted -

(1) after the expiration of the 5-year period beginning on the first date . . . when repayment of such loan is required;

(2) upon a finding by the Bankruptcy Court that the nondischarge of such debt would be unconscionable; and

(3) upon the condition that the Secretary [of Health & Human Services] shall not have waived the Secretary's rights to apply subsection (f) of this section to the borrower and the discharged debt. *fn1 42 U.S.C. former § 294f(g).

This section was amended in 1988, recodified as 42 U.S.C. § 292f(g) in 1992, and then amended again in 1993 and 1998. See 42 U.S.C. § 292f (2002) (historical & statutory notes at 345-46); 42 U.S.C. former § 294f (1991) (historical & statutory notes at 542). With the exception of the 1993 amendment to 42 U.S.C. § 292f(g)(1), which changed the expiration period to seven years, the current version of the statute is substantially similar to the version that was in effect in 1984. It now states:

Notwithstanding any other provision of Federal or State law, a debt that is a loan insured under the authority of this subpart may be released by a discharge in bankruptcy under any chapter of Title 11, only if such discharge is granted -

(1) after the expiration of the seven-year period beginning on the first date when repayment of such loan is required, exclusive of any period after such date in which the obligation to pay installments on the loan is suspended;

(2) upon a finding by the Bankruptcy Court that the nondischarge of such debt would be unconscionable; and

(3) upon the condition that the Secretary shall not have waived the Secretary's rights to apply subsection (f) of this section to the borrower and the discharged debt. *fn2 42 U.S.C. § 292f(g) (amendments italicized).

Subsection 294f(g)(2), which was in effect in 1984, and subsection 292f(g)(2), which is in effect now, are the same: they both require a finding that nondischarge would be unconscionable. *fn3

II. Rushing's HEALs, Default, and Bankruptcy

Rushing, as a student enrolled in a chiropractic school, was granted HEALs in the sums of $4,176 in April 1984, $12,500 in September 1984, $12,500 in 1985, and $3,800 in 1986. (Compl., Ex. A, 10-9-01 Indebtedness Certificate ("Indebt. Certif.").) Rushing, pursuant to the promissory notes that he signed, agreed to repay the HEALs at a variable interest rate after ceasing to be a full-time student or completing a residency program. (Pl.'s Answer to Mot., Ex. A, Promissory Notes dated 4-84, 9-84, 7-85, & 4-86 ("Prom. Notes").) In addition, each note states that the terms were to "be construed according to the Law (42 U.S.C. 294 et seq.) and the Federal regulation (42 CFR Part 60) governing the administration of the [HEAL] Program, copies of which are on file with the holder of this Note." (Id. (as stated therein).) *fn4

The Student Loan Marketing Association [SLMA] then purchased the promissory notes and received an assignment. (Indebt. Certif.) Subsequently, according to the Certificate of Indebtedness sent to Rushing by the ...


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